COLTON – Through staff adjustments and pay cuts, the City Council adopted a 2009-10 budget Tuesday night, but a financial road block may still be ahead.

The $35.8 million budget for the new fiscal year doesn’t account for any possible takeaways the state may impose in the coming days.

The council’s budget goal was to keep service levels basically the same and avoid layoffs, Finance Director Dilu De Alwis said. Those objectives were made through various staff adjustments and pay cuts employees took that amount from 2.4 to 2.6 percent of their salaries, officials said.

Interim City Manager Bob Miller praised employees for their willingness to reduce salaries in order to avoid layoffs or service reductions that would effect the community.

“We got some great people that really have the city at heart,” Miller said. “They took some onus upon their self in order to save other jobs because one of the edicts that we were told is, `balance the budget with no layoffs.’ ”

Republican Gov. Arnold Schwarzenegger and the Democrat-dominated Legislature are still wrestling to reach a state budget agreement, and proposals to take billions from local coffers to fill a deficit of about $25 billion is still on the table.

If the state takes go through the city could lose as much as $1.3 million. Officials have said that would significantly impact capitol projects and city services.

At Tuesday’s meeting Mayor Kelly Chastain said state officials should take a lesson from local governments – not their money – and make the necessary cuts or adjustments to balance its budget without impacting cities and counties.

“We’d only hope that the state could take some lessons from us,” Chastain said. “That we would rub off on them and that they would do the same type of cuts that they need to do.”

The city’s budget is down about $4 million when compared to the 2008-09 fiscal year, said De Alwis. The drop is a result of slumping sales tax and other revenue declines, a city report stated.

In order to bring spending in line with revenue projections city staff had to make certain adjustments, including scaling back tree trimming, weekend graffiti abatement and certain community programs, De Alwis said.

A community fireworks display to commemorate the city’s incorporation was to be held Saturday, but the event was canceled to save money, De Alwis said.